Week 3 Ie 2033

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  • 1. CHAPTER 3
    • COMPETITIVE LANDSCAPE-CHANGING PROPERTIES OF THE INTERNET
    • This chapter answers the question;
    • What makes the Internet a better technology?
    • Does it have potential to transform competitive landscape?
    • Look at properties of the Internet that have the potential to influence business models & industry profitability.
  • 2. PROPERTIES OF THE INTERNET
    • Mediating Technology
    • Universality
    • Network Externalities
    • Distribution Channel
    • Time Moderator
    • Information Asymmetry Shrinker
    • Infinite Virtual Capacity
    • Low Cost Standard
    • Creative Destroyer
    • Transaction Cost Reducer
  • 3. Interactive Activity
    • Which industries stand to benefit the most from the Internet?
    • Which activities (business processes/activities) are least likely to be impacted by the Internet?
  • 4. wiki
    • Industry-
    • …… the people or companies engaged in a particular kind of commercial enterprise
    • …… the organized action of making of goods and services for sale;
  • 5. 1. MEDIATING TECHNOLOGY
    • Interconnects parties that are interdependent or want to be
    • Can be B2B,B2C or C2B
    • It facilitates exchange relationships among parties distributed in time & space.
    To succeed in finding a solution.
  • 6. 2. UNIVERSALITY
    • Refers to the Internet's ability to both large & shrink world. Anyone can sell anything anywhere thro Internet service can be retrieve across the globe. E.g. software developer's services & experiences.
  • 7. 3. Network Externalities
    • As more people take advantage of the Internet the more it became useful.
    • Phone example, Kazaa file sharing, bit torrent
    • (Bob Metcalfe) Metcalfe’s Law: N
    • “ The value of a network increases as the square of the number of people in the network”
    N
  • 8. 4. DISTRIBUTION CHANNEL
    • Acts as a distribution channel for products that are largely information-bits (0110100)
    • Replacement effect of the internet that the internet serves using the old distribution channel
  • 9. Replacement effect &extension effect
    • Replacement effect-book example
    • Extension effect- brokerage online
  • 10. 5. TIME MODERATOR
    • Ability to shrink & enlarge time
    • Shrinks time for potential customers to find information on buying cars
    • Enlarge time by for example: work on a software program that starts in japan and sends it o US to finish it off and sends back to Japan
  • 11. Work starts here. Software development Extend development here.
  • 12. 6. INFORMATION ASYMMETRY SHRINKER
    • Exist when one party to a transaction has information that another party does not
    • E.g source of advantage of a car dealer,car dealers always knew the cost of the car but the customers don’t
    • Therefore the web offers information to the customer
  • 13.  
  • 14. 7. INFINITE VIRTUAL CAPACITY
    • Technological advances that improve storage & network technologies
    • Similar to Moore’s Law.
  • 15.  
  • 16. 8. LOW COST STANDARD
    • Internet are open standards and very easy to use. Information is transmitted & received using the same protocol.
    • Cost is very low, the remaining cost are shared among millions of user since it is a standard
  • 17.  
  • 18.  
  • 19. 9. CREATIVE DESTROYER
    • The Internet is a low cost standard printing press of sorts and a distribution network with unlimited capacity .It tears down large part of the barriers to entry that exist it that industry
    • Creative destruction of the newspaper industry.
  • 20. newspaper
    • High cost
    • Printing
    • Distribution network
    • Brand names.
    $$$$
  • 21.  
  • 22. 10. TRANSACTION-COST REDUCER
    • Cost of searching for sellers & buyers, collecting information on products, negotiating, writing, monitoring & enforcing contracts. All this activities cost money.
    • It reduces the cost by providing information on buyers & sellers & products on the Web.
    • Some products can be ‘shipped’ over the web e.g. software, music, videos, ect. thus reduces transportation cost.
  • 23.  
  • 24. NEXT WEEK PART2
    • Quiz #2 due next week 1 week from today.
    • 7-8 page min.
    • Tutorial???
    • How to write a good paper.
  • 25. IMPACT OF THE INTERNET ON THE 5-Cs
    • The ability to envision & delivering value to customers require the performance of many activities that rest on information exchange. 5 activities are;
      • Coordination
      • Commerce
      • Community
      • Content
      • Communication
      • The 5-Cs
  • 26. 1. Coordination
    • Ensure that each subtask is performed.
    • Sharing of information is done constantly
    • Resources are shared accordingly to perform task
    • E.g. task T requires the performance & coordination of subtask A , B & C .
    • Development of Pentium III , design & building of Boeing 777
  • 27. 2. Commerce
    • Performing commerce over the internet has low cost standards & universality standards
    • Potential customers all around the world
    • Types of e-commerce
      • B2B
      • B2C
      • C2C
      • C2B
  • 28. 3. Community
    • Electric community have many advantages over physical communities
    • Virtual community can congregate online through chat rooms & message boards
    • The advantage of universality & low cost standard properties-anyone from anywhere can join the group
    • ‘ Time moderator effect’ states that group do not have to meet at the same time
  • 29. 4. Content
    • Information, entertainment & other products that are delivered over the Internet
    • Entertainment-Disney online, MTV online, interactive video games,& sport casting
    • Information-current news, stock quotation, weather forecast, & investment information.
  • 30. 5. Communication
    • Beyond all the other C’s the heart of it –communication
    • E-mail, web phones, real-time video, ect.
    • Every user has the capability to broadcast message.
  • 31. LIMITATIONS TO TRANSACTIONS OVER THE WEB
    • Internet is Information Technology
    • Information sent over internet encoded into one’s & zero’s 100101110.
    • Soon the information sent over the Internet must be handled by people.
    • This will cause limitation on conducting business
      • Tacit Knowledge
      • People
  • 32. Tacit Knowledge
    • Knowledge is tacit if un coded & non verbalized
    • Tacit knowledge on which transaction rest cannot be encoded into a form that can be put onto the internet & transmitted.
  • 33. People
    • Transactions over the Internet are limited by humans & their organization.
    • Individuals & organizations are limited because they may not be able to encode knowledge into a form that can be transmitted over the Internet-the receiving end may not understand it.
    • Difficult to perform transaction over the Internet, maybe virtual reality can help.